Manufacturing Retains Growth Pace in Q4 Despite Cost Pressures: Ficci

Why It Matters

Sustained production growth signals resilience in India’s industrial base, supporting GDP expansion and attracting foreign investment despite inflationary and geopolitical headwinds. The mixed picture of cost pressures and hiring optimism highlights both challenges and opportunities for policymakers and investors.

Key Takeaways

• 93% of firms kept production steady or grew in Q4
• Production costs rose for 70% of manufacturers, up from 57%
• Capacity utilisation fell to 72%, with textiles at 76.4%
• 41% plan new hires, indicating confidence despite cost pressures
• 80% expect stable or higher exports, up from 74% in Q3

Pulse Analysis

India’s manufacturing engine showed surprising stamina in the March quarter, outpacing many emerging‑market peers. While global supply‑chain disruptions and a weaker rupee nudged raw‑material prices higher, domestic consumption held firm, buoyed by government stimulus and a rebound in consumer confidence. The Ficci survey, covering more than 250 firms with combined turnover of roughly Rs 8 lakh crore (about $96 billion), underscores that demand‑side momentum can offset cost‑side headwinds, at least in the short term.

Capacity utilisation dipped to 72% as firms trimmed output to match tighter margins, but sectoral nuances emerged. Textiles led with 76.4% utilisation, reflecting strong apparel demand, while electronics lagged at 68%, hinting at slower adoption of high‑tech goods. Despite the slowdown, 41% of respondents intend to recruit new staff within three months, signalling confidence in future order books. Investment plans remain upbeat, with many manufacturers eyeing upgrades to mitigate energy and logistics costs, a critical step given the average 8.85% borrowing rate they face.

For investors and policymakers, the data paints a dual narrative. On one hand, the resilience of production and export outlook—80% expect stable or higher shipments—reinforces India’s appeal as a manufacturing hub. On the other, rising input costs and regulatory bottlenecks could erode margins if not addressed. Continued access to affordable credit, as indicated by 86% reporting sufficient funding, will be pivotal. Strategic interventions in power pricing, logistics infrastructure, and trade policy could sustain the growth trajectory and deepen India’s integration into global supply chains.